Naira Plummets To N1,420 Per Dollar As Demand For US Dollars Rises

THE naira dropped to N1,309 per US dollar at the official market and N1,420 in the parallel market on Thursday, April 25, continuing its downward trend against the dollar.

The new rate, which deviates by N90 (6.8%) from the N1,330 posted by Bureau de Change (BDC) operators the previous day, is the result of fresh pressure on the foreign exchange market from dollar demand.

BDC operators in Abuja claim that they made a profit margin of N80 by buying the dollar at N1,340 and selling it at N1,420.

An exchange dealer stated, “We are selling at N1,420 per dollar today (Thursday) and we bought at N1,340. The only reason why the naira is dropping is because of an increased demand for the greenback (dollar). The CBN is trying to address the situation but it has not affected the market.”

Citing persistent worries that the Central Bank of Nigeria, or CBN, would take strong action to stabilize the currency, another dealer advised prudence when dealing.

He clarified that traders were able to recover losses due to the huge profit margins that were being driven by this concern.

“Yes, the dollar is rising gradually but we are still afraid and trading cautiously because anything can happen and it falls. You would have noticed that the profit margin is high too. We have to recover some of our losses.”

Comparing the current exchange rate to the N1,125 per dollar quoted on April 12, 2023, on the parallel market, also known as the black market, shows that the naira has lost 26.2 percent in just two weeks.

In an effort to increase liquidity in the black market, the Central Bank of Nigeria, CBN, approved the payment of $15.83 million to 1,583 Bureau De Change (BDC) operators on Monday, April 22.

The CBN announced the allocation of $10,000 to operators nationwide, pegged at a rate of N1,021 per US dollar, in a communiqué addressed to BDC operators. The goal of this action is to guarantee that foreign currency is available to qualified receivers and to stabilize the foreign exchange market.

In accordance with a memo sent by the CBN to the Nigerian Association of Bureau De Change Operators, all eligible BDCs are directed to begin Naira deposits into designated CBN Naira Deposit Account Numbers on Monday, April 22, 2024. The CBN will dispense foreign exchange at the appropriate CBN branches following payment verification and the submission of the necessary paperwork.

On the official market, however, by Thursday's close of business, the value of the naira fell to N1,309.88 against the US dollar, down 0.10 percent from N1,308.52 on Wednesday.

According to an analysis of foreign exchange transactions, the intra-day peak dropped by N68, finishing at N1,435 per dollar as opposed to N1,367 earlier. Furthermore, the intra-day trough dropped from N1,098 on Wednesday to N1,100.

The amount of forex traded between a willing seller and a willing buyer increased by 61 percent, to $318.08 million. This is more than the $197.54 million that was previously registered at the Nigerian Autonomous Foreign Exchange Market, or NAFEM, on Wednesday.

Yemi Cardoso, the governor of the CBN, announced over the weekend that as of April 2024, the Naira is the currency with the best performance worldwide.

In March, the value of the naira dropped to as low as N1,600 per dollar on the official market and N1800 per dollar on the parallel market, earning it the unfortunate title of being the worst currency in the nation.

He said that this accomplishment comes after a number of adjustments to the foreign exchange market and is backed by favorable opinions from major global investment organizations.

Cardoso said this during a news conference held in Washington, DC, USA, on the fringes of the World Bank/International Monetary Fund meeting that ended recently.

It is unclear, therefore, what tactics the apex bank will employ to guarantee the